One oil well, hardly used

Gas from a productive Tui well is used to power this oil production facility, the Umuroa. Photo / Supplied

An abandoned well off Taranaki could be used to store excess gas that is now burned off.

A consortium said yesterday it had failed to find commercial quantities of oil in the southern Tui field but a spokesman for one of the partners says the $50 million plus spent may not all go to waste.

Gas from an already productive well could be injected into the unsuccessful Tui SW-2 well to be used later to power processing on the offtake vessel.

A New Zealand Oil & Gas spokesman said at present some gas from the productive Tui well was used to power the processing plant on the Umuroa - the production, storage and offtake vessel - but the excess had to be burned off.

The rate of gas production would, however, slow down to the point where diesel may have to be used to fuel processing at Umuroa where oil, water and gas is separated. Excess gas stored in the abandoned Tui SW-2 well could be used instead, the spokesman said.

"Over the coming months we'll look at the economics of it and the joint venture will have to make a call."

The Tui SW-2 exploration well 50km off the coast revealed traces of oil but further testing showed it had too much water mixed with it, he said.

"We're disappointed - what we were looking for was a 5 million barrel addition to the 50 million barrels we already have."

Through Stewart Petroleum, NZOG has a 12.5 per cent stake in Tui exploration. Other participants are AWE with a 42.5 per cent stake in the permit, Mitsui E&P Australia, 35 per cent and Pan Pacific Petroleum with 10 per cent.

The Tui SW exploration had run over budget because of drilling problems with an earlier well and weather delays.

The Kan Tan IV drilling rig will in several days be moved several kilometres to the east to drill on the eastern edges of the Tui field.

"There's more uncertainty about what happens in that direction, what the geography is doing but the potential size is a lot bigger than what Tui southwest was."

NZOG fell 7c to $1.36 and Pan Pacific Petroleum fell 2c to 25c yesterday.